In 2008 there were some 500 Internet service providers across the country. About 54 per cent of them were independents of various sizes who buy connectivity from facilities-based carriers for resale to businesses and consumers.
But collectively the independents, or ISPs, had less than five percent of high speed Internet subscribers.
On Monday the federal telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC) starts a five-day hearing which could decide whether ISPs will wither away because they are denied mandatory wholesale access to the newest networks built by telcos and cablecos.
These are what incumbents call their next-generation fibre optic networks that boast the possibility of speeds of at 100 Mbps and more. Such speeds are expected to be highly in demand by small businesses and consumers for converged multimedia services.
But after years of being told by the CRTC to give ISPs wholesale access to their copper or coaxial-based networks, telcos and cablecos are firmly rejecting the regulator’s right to order access to the new networks they are pouring hundreds of millions of dollars into.
In short, they believe it’s time ISPs started putting money into their own networks.
However, ISPs say that without the ability to match the speeds of incumbents they can’t compete for subscribers.
“Unless the commission acts soon to enhance and stabilize the regulatory environment,” says one written submission from an ISP, “the competitive flame will be extinguished and the very existence of innovative [ISP] companies … will be in jeopardy.”
“This is one they [ISPs] have to fight,” said Iain Grant, managing director of the SeaBoard Group, a Montreal-based telecommunications consultancy.
“In terms of innovation, in terms of pushing the edge, in terms of customer service” ISPs have been ahead of the biggest phone and cable companies, he said. But, he added, ISPs can’t scale to the size of incumbents.
“It’s a really tough business to be in,” Grant said. “And if this goes the wrong way for them is going to make it even tougher.”
The other side of the coin, says telecom consultant Mark Goldberg, is that in many Canadian cities there are two facilities-based competitors for customers to choose from: a phone company and a cable company. Why then, he asks, should a regulator order them to give access to ISPs?
“Having numerous competitors has not typically been an objective of the CRTC,” said Goldberg, who is based in Thornhill, Ont. “The CRTC is interested in a competitive marketplace, not as an end in and of itself but as a means to provide consumer benefits” such as fair pricing and service.
There’s every expectation that the hearing will be lively, with five ISPs plus two groups representing dozens more ISPs giving presentations, against telcos and cablecos.
In fact, it will also be a three-way war, with major phone companies taking the opportunity to complain the commission puts more obligations on them than on cable companies. For every wholesale access service telcos are obliged to competitors, they say, cable should have to supply similar services and not merely Internet access
The hearing is imporant to incumbents in another way, for it will also examine the framework the commission created in 2008 to define essential services, which competitiors can get acccess to.
Dubbed the high speed access hearing, it will start with addresses by BCE Inc.’s Bell
Canada and its partners, Atlantic Canada’s Bell Aliant Regional Communications Partnership and northern Quebec’s Telebec. Also to be heard will be ISPs Teksavvy Solutions Inc.
of Chatham, Ont., Toronto-based Primus Telecommunications Canada
and Execulink Telecom Inc. of Kitchener, Ont.